Correlation Between Permian Resources and Starlight Energy

Can any of the company-specific risk be diversified away by investing in both Permian Resources and Starlight Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Permian Resources and Starlight Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Permian Resources and Starlight Energy Corp, you can compare the effects of market volatilities on Permian Resources and Starlight Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Permian Resources with a short position of Starlight Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Starlight Energy.

Diversification Opportunities for Permian Resources and Starlight Energy

0.0

Correlation Coefficient

Permian Resources  Starlight Energy

Pay attention - limited upside

The 3 months correlation between Permian and Starlight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Starlight Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starlight Energy Corp and Permian Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Permian Resources are associated (or correlated) with Starlight Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starlight Energy Corp has no effect on the direction of Permian Resources i.e., Permian Resources and Starlight Energy go up and down completely randomly.

Pair Corralation between Permian Resources and Starlight Energy

If you would invest  1,374  in Permian Resources on September 17, 2024 and sell it today you would earn a total of  44.00  from holding Permian Resources or generate 3.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Permian Resources  vs.  Starlight Energy Corp

Permian Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Permian Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Permian Resources is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Starlight Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starlight Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Starlight Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Permian Resources and Starlight Energy

The main advantage of trading using opposite Permian Resources and Starlight Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Starlight Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Starlight Energy will offset losses from the drop in Starlight Energy's long position.

The idea behind Permian Resources and Starlight Energy Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.